Brenda Myrtle Sumner & Ors v Costa Ltd & Ors (2014)

Summary

In determining a rent review, an arbitrator was not required to set out every reason he had as to the weight to be given to each comparable property.

Facts

The applicant landlords (L) challenged the award of the second respondent arbitrator regarding a rent review under the commercial lease of the first respondent tenant (T) under the Arbitration Act 1996 s.68 and s.69.

The arbitrator had been appointed to find the rent which would be paid under a hypothetical lease of the premises as at the rent review date. In relation to one comparable letting cited by L, known as the Card Factory letting, he noted that the transaction had occurred after the rent review date he was considering, and stated in his award that "having regard to the established case law on post-review date evidence, [he did not attribute] any weight" to that transaction. L considered that the reference to case law showed that the arbitrator had taken into account matters not argued before him as neither party had cited case law to him. They requested that the matter be reconsidered with the Card Factory letting taken into account. The arbitrator replied in a letter that his reasons were as set out in the award, and that he stood by the award. L issued the instant proceedings. In a witness statement, the arbitrator stated that he had referred to "case law" loosely and had intended to refer to the Handbook on Rent Review, which had been cited to him. He gave further reasons for not giving weight to the Card Factory letting and stated how he would have treated it had he given it weight.

L argued that the letter and witness statement showed that the award had not contained all the arbitrator's reasoning, or that the letter or the statement was untrue and the arbitrator had invented reasoning that had not been in his mind at the time of the award.

Held

(1) It was not surprising for a non-lawyer arbitrator to characterise the relevant page of the handbook as "case law": the page was replete with case law. The arbitrator had since recognised that he had used the expression loosely. L had criticised the reference to case law incorrectly assuming that the arbitrator had referred to material other than that which the parties had placed before him (see para.42 of judgment). (2) L's claim implied that the arbitrator had done something irregular by not including in the award all the matters he had considered. That criticism was not justified. The arbitrator was not required to set out every reason he had as to the weight to be given to each comparable. Further, the exercise was not scientific. The matters set out in the award sufficed as a statement of reasons. But for the arbitrator's subsequent witness statement, there would have been nothing to criticise in terms of the provision of reasons. Insofar as the matters in the witness statement amounted to fuller reasons, they did not invalidate the reasoning in the award, and in any event they did not contain substantially different reasoning from that in the award (paras 44-46). (3) The arbitrator had been entitled in his letter to reply very shortly in the way that he had. He had not said that he did not have other matters in mind at the time of the award, but that the award contained the reasons for the award. Based on what was expected of an arbitral award, that was correct (para.49). (4) The submission that the arbitrator had in his witness statement invented an untruth was based on the false premise that had he had the unmentioned matters in his mind, he would have been bound to mention each of them. Further, at least in part, the arbitrator had distinguished in the statement between matters he did and did not have in mind at the time of the award (para.59). (5) The award and subsequent documents did not disclose a serious irregularity under s.68. The reference to case law had not been to case law beyond that submitted by the parties. For the purpose of s.68, a misapplication of the law provided to the arbitrator did not give rise to an irregularity in the sense of deciding the case on the basis of arguments not put to the arbitrator without the opportunity for the parties to consider them. The matters set out in the witness statement did not indicate an irregularity by those matters not having been raised with the parties. The arbitrator had pointed out areas where there was no evidence before him; that was not to rely on a new point. The arbitrator's reasons were adequately set out in the award and there was no flaw in his reasoning (paras 75-77, 84). (6) The arbitrator had said that he had had regard to the case law on the post-review date evidence. He had not said that the effect of the law was that he was required to give no weight to the Card Factory letting or that post-review letting evidence was inadmissible. Instead, on the facts of the case, and having regard to the case law, he had not given weight to the Card Factory letting. The case di